Please help if you can and please show the equations, thank you!! On May 1, 2017

Question

Please help if you can and please show the equations, thank you!!

On May 1, 2017, Herron Corp. issued $920,000, 12%, 5-year bonds at face value. The bonds were dated May 1, 2017, and pay interest annually on May 1. Financial statements are prepared annually on December 31.

a. Prepare the journal entry to record the issuance of the bonds

b. Prepare the adjusting entry to record the accrual of interest on December 31,2017

c. Show the balance sheet presentation on December 1st, 2017

d. Prepare the journal entry to record payment of interest on May 1st, 2017, assuming no accrual of interest from January 1st, 2017 to May 1st, 2017

e. Prepare the journal entry to record the payment of interest on November 1st, 2017

f. Assume that on November 1st, Herron calls the bonds at 103. Record the redemption of the bonds

Explanation / Answer

a) For Issue of Bonds: S No Particulars Debit   Credit 1 Cash            920,000 To 12%, 5 Year Bond Payable 920,000 b) Accrued Interest on December = 920000 * 12% *10 Moths/12 Months = 92000 c) Balance Sheet Presentation: Liabilities : 12% 5 Year Bond Payable            920,000 Add: Interets Accrued              92,000 Total Payable         1,012,000 d) No Interest will ge Accrue by May 1st 2017, Sice issue of bond was dated on May 1st 2017 itself e) Interest for 9 Moths : = 920000 * 12% *9 Moths/12 Months = 82800 Interest Accrued To 12% Bonds Payable              82,800     82,800 f) Redemption of bonds: 12%, 5 Year Bond Payable            920,000 Loss on Redemption of Bonds              27,600 To Cash 9200 @103 947,600 Interest Payable              82,800 To Cash     82,800 (Assumed Interest is being paid separately)

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